Getting payback from pay February 2011
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Getting payback from pay February 2011

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One day event including two meals and networking opportunity for compensation & benefits professionals in the GTA, held near Pearson Airport in Toronto.

One day event including two meals and networking opportunity for compensation & benefits professionals in the GTA, held near Pearson Airport in Toronto.

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Getting payback from pay February 2011 Presentation Transcript

  • 1. Getting payback from pay
    by Toronto Training and HR
    February 2011
  • 2. Contents
    3-4 Introduction to Toronto Training and HR
    5-6 In the beginning
    7-8 Drill A
    9-20 What should we be paying…?
    21-26 Case studies A-C
    27-28 Pay strategy
    29-39 Executive pay
    40-42 Changing incentive schemes for senior executives
    43-44 Drill B
    45-46 Graduate salaries
    47-48 Expatriates; year-end planning
    49-50 Performance-related pay
    51-53 Variable pay
    54-56 Effective and fair bonus schemes
    57-59 What does the future hold?
    60-65 Case studies D-F
    66-67 Conclusion and questions
    Page 2
  • 3. Page 3
    Introduction
  • 4. Page 4
    Introduction to Toronto Training and HR
    Toronto Training and HRis a specialist training and human resources consultancy headed by Timothy Holden
    10 years in banking
    10 years in training and human resources
    Freelance practitioner since 2006
    The core services provided by Toronto Training and HR are:
    • Training course design
    • 5. Training course delivery
    - Reducing costs
    • Saving time
    • 6. Improving employee engagement & morale
    • 7. Services for job seekers
  • Page 5
    In the beginning…
  • 8. Page 6
    In the beginning…
    Extrinsic and intrinsic rewards
    Objectives
    Direct v indirect reward
  • 9. Page 7
    Drill A
  • 10. Page 8
    Drill A
  • 11. Page 9
    What should we be paying…design professionals?
  • 12. Page 10
    What should we be paying…design professionals?
    FIFTIETH PERCENTILE
    Solo Designer $52,000
    Owner/Partner/Principal $95,000
    Creative/design director $91,000
    Art director $70,000
    Senior designer $61,500
    Designer $45,000
    Entry-level designer $36,000
    Print production manager $60,000
    Web designer $55,000
    Copywriter $60,000
  • 13. Page 11
    What should we be paying…EHS professionals?
  • 14. Page 12
    What should we be paying…EHS professionals?
    Overall $100,000
    President or higher $150,000
    Vice president $147,500
    Director $120,000
    Manager $92,000
    Engineer $92,000
    Specialist $79,250
    Coordinator $74,000
  • 15. Page 13
    What should we be paying…Project Managers?
  • 16. Page 14
    What should we be paying…Project Managers?
    Resources (Agriculture, Mining, etc.) $120,000
    Consulting $116,000
    Pharmaceuticals $110,000
    Engineering $106,000
    Aerospace $105,000
    Government $104,832
    Food and beverage $102,000
    Utility $102,000
    IT $100,422
  • 17. Page 15
    What should we be paying…experienced IT experts?
  • 18. Page 16
    What should we be paying…experienced IT experts?
    Chief Technology Officer $111,750 - $174,250
    Information Technology Manager $88,250 - $127,000
    Developer/Programmer Analyst $57,750 – $102,250
    Lead Applications Developer $85,000 – $117,500
    Software Engineer $73,500 – $112,000
    Systems Administrator $53,250 – $83,000
    Database Manager $90,000 – $122,500
    Senior Web Developer $58,000 – $94,250
    Network Engineer $71,000 – $101,750
    Project Manager/Senior Consultant $81,500 – $117,000
    Systems Security Administrator $81,500 – $112,500
  • 19. Page 17
    What should we be paying…healthcare professionals involved in operating theatres?
  • 20. Page 18
    What should we be paying…healthcare professionals involved in operating theatres?
    Overall $73,310
    Surgical services director/manager $86,543
    OR director/manager $80,657
    Clinical director/coordinator $89,800
    OR supervisor $71,667
    OR business/financial manager $83,708
    OR materials manager/coordinator $55,667
    Surgical instruments manager $52,667
    Other $65,667
  • 21. Page 19
    What should we be paying…healthcare professionals involved in infection control & prevention?
  • 22. Page 20
    What should we be paying…healthcare professionals involved in infection control & prevention?
    Microbiologist $57,500
    Infection Preventionist $68,381
    Infection Control Practitioner $65,203
    Infection Control Nurse $57,151
    IC Manager $79,031
    IC Director $78,714
    IC Coordinator $67,575
    Epidemiologist $80,833
    Educator $67,500
  • 23. Page 21
    Case study A
  • 24. Page 22
    Case study A
  • 25. Page 23
    Case study B
  • 26. Page 24
    Case study B
  • 27. Page 25
    Case study C
  • 28. Page 26
    Case study C
  • 29. Page 27
    Pay strategy
  • 30. Page 28
    Pay strategy
    THREE BASIC FACTORS
    Compensation
    Perks
    Happy & healthy working environment
  • 31. Page 29
    Executive pay
  • 32. Page 30
    Executive pay 1 of 10
    FLAWS IN CURRENT PACKAGES
    The nature of awards and excessive leveraging.
    Lack of discipline in setting targets and assessing performance.
    Failure of incentive plans to match timing of payments with risk realization.
    Failure to integrate risk into incentive plans.
  • 33. Page 31
    Executive pay 2 of 10
    FINANCIAL STABILITY FORUM PRINCIPLES
    The board must actively oversee the compensation system’s design and operation.
    The board must monitor and review the compensation system to ensure it operates as intended.
    Employees engaged in financial and risk control must be independent, have appropriate authority and be compensated in a manner that is independent of the business areas they oversee and commensurate with their key role in the firm.
  • 34. Page 32
    Executive pay 3 of 10
    FINANCIAL STABILITY FORUM PRINCIPLES
    Compensation must be adjusted for all types of risk.
    Compensation outcomes must be symmetric with risk outcomes.
    Compensation pay-out schedules must be sensitive to the time horizon of risks-mix of cash, equity and other forms of compensation must be consistent with risk alignment.
  • 35. Page 33
    Executive pay 4 of 10
    FINANCIAL STABILITY FORUM PRINCIPLES
    Supervisory review of compensation practices must be rigorous and sustained, and deficiencies must be addressed promptly with supervisory action.
    Firms must disclose clear, comprehensive and timely information about their compensation practices to facilitate constructive engagement by all stakeholders.
  • 36. Page 34
    Executive pay 5 of 10
    DRAWBACKS WITH CLAWBACKS
    A clawback does not encourage prudent performance. It punishes after the fact, which, perversely, can increase business risk by deterring disclosure, a situation that might result in the application of the clawback.
    Expanding the clawback to deal with excessive risk taking is difficult because the focus needs to be on risk-taking behaviour rather than on an occasional poor result.
  • 37. Page 35
    Executive pay 6 of 10
    DRAWBACKS WITH CLAWBACKS
    A clawback forces the company to recover funds from the employee, which is legally and practically difficult. Courts are unlikely to enforce clawbacks unless they are clear and
    unambiguous. Moreover, the company will need to incur legal and other costs to recover incentive amounts, and the employee may no longer have the funds to repay the amount.
    Dealing properly with taxation of a clawed-back bonus is complex.
  • 38. Page 36
    Executive pay 7 of 10
    SYNCHRONIZING THE TIMING OF PAYMENT & RISK REALIZATION
    Payment of incentives based on results net of realized risks, with payment deferred until the associated risks have been realized. This provides for an integrated result and risk-based incentive.
    Payment of incentives based on results, with payment held in escrow until the end of the risk realization period. However, it can be complex to assess the effect and quantum risk and properly define the risk-realization period.
  • 39. Page 37
    Executive pay 8 of 10
    SYNCHRONIZING THE TIMING OF PAYMENT & RISK REALIZATION
    Payment of incentives in the form of share-based compensation, with the shares held in escrow until the end of the risk-realization period. This allows share price to be a proxy for the real cost of realized risk, which can materially simplify the plan.
  • 40. Page 38
    Executive pay 9 of 10
    RESPONSIBILITIES OF THE COMPENSATION COMMITTEE
    Establishing plan terms, set up and targets.
    Assessing expected pay-out levels.
    Monitoring performance against expectations and financial realities.
    Correcting errors.
    Having the courage to exercise discretion in both directions (increase payments when a plan does not generate a payment in deserved circumstances and decrease payments when the plan terms provide for overpayment).
  • 41. Page 39
    Executive pay 10 of 10
    RESPONSIBILITIES OF THE COMPENSATION COMMITTEE
    Allowing discretion requires real trust between the board and the executives, because the flexibility must be in the plan, and with it comes the risk that the board may reduce compensation even when targets are met.
  • 42. Page 40
    Changing incentive schemes for senior executives
  • 43. Page 41
    Changing incentive schemes for senior executives 1 of 2
    Introduce new financial measure(s)
    Introduce new non-financial measure(s)
    Introduce new relative measures
    Increase funding pools
    Decrease funding pools
    Add a maximum funding cap, if one does not exist Increase range of performance for corresponding pay-out levels
    Decrease range of performance for corresponding pay-out levels
  • 44. Page 42
    Changing incentive schemes for senior executives 2 of 2
    Allow for increased discretion related to pay-outs Allow for decreased discretion related to pay-outs Increase threshold pay-out opportunity
    Decrease threshold pay-out opportunity
    Increase maximum pay-out opportunity
    Decrease maximum pay-out opportunity
    Provide for mandatory pay-out of all or portion of
    award in share/share units
  • 45. Page 43
    Drill B
  • 46. Page 44
    Drill B
  • 47. Page 45
    Graduate salaries
  • 48. Page 46
    Graduate salaries
    Educational Services $33,883
    Retail/Wholesale Trade $41,805
    Government (Federal) $46,874
    Financial Services $49,218
    Accounting Services $50,371
    Consulting Services $55,148
    Engineering Services $56,070
    Banking (Investment) $60,806
    Petroleum & Coal Products $67,630
    Healthcare Services (For Profit) $73,728
  • 49. Page 47
    Expatriates; year-end planning
  • 50. Page 48
    Expatriates; year-end planning
    Determination of expatriate compensation
    contacts (stakeholders)
    Set deadlines
    Collection tools
    Determination of expatriate population
    Reporting
  • 51. Page 49
    Performance-related pay
  • 52. Page 50
    Performance-related pay
    FACTORS CONTRIBUTING TO AN EFFECTIVE PAY FOR PERFORMANCE CULTURELeadership support
    Processes for differentiating performance processes for delivering pay to high performers
    REASONS FOR HAVING AN INEFFECTIVE PAY FOR HAVING AN INEFFECTIVE PAY FOR PERFOMANCE CULTURE
    Limited compensation budget
    Inability for leaders and managers to deliver feedback
    Lack of leadership support
  • 53. Page 51
    Variable pay
  • 54. Page 52
    Variable pay 1 of 2
    DRIVERS OF CHANGE
    Better alignment with business strategy
    Improve company or team performance
    Create better alignment or line of sight between corporate and individual performance
    Ensure market competitiveness
    Reinforce specific business priorities
    Improve individual performance
    Improve employee engagement
  • 55. Page 53
    Variable pay 2 of 2
    DRIVERS OF CHANGE
    Ensure retention
    Better balance of fixed and variable costs
    Ease with which the program can be communicated and understood
    Satisfy external stakeholders demands (investors, media, community)
    Comply with regulations or governance requirements
    Reduce risk
  • 56. Page 54
    Effective and fair bonus schemes
  • 57. Page 55
    Effective and fair bonus schemes 1 of 2
    Eligibility
    Plan philosophy
    Performance measures
    Line of sight
    Calculation
    Threshold
  • 58. Page 56
    Effective and fair bonus schemes 2 of 2
    Payment calculation
    Percentage of salary
    Fixed amount
    To base bonus on a predetermined bonus pool formula
    Timing
    Dos
    Don’ts
  • 59. Page 57
    What does the future hold?
  • 60. Page 58
    What does the future hold? 1 of 2
    The dampening impact on salaries caused by the 2009 economic crisis is subsiding.
    Most employers are expecting to be in a position to afford more aggressive salary increases than they have implemented in recent years; though not to the same levels as experienced before the economic downturn.
  • 61. Page 59
    What does the future hold? 2 of 2
    Most employers are deciding it is important to reward employees with more substantial salary increases in 2011.
    There will be more salary increase dollars available in 2011 to reward and retain top performers.
    Assuming the economy continues to demonstrate recovery, given the upward momentum highlighted in the survey results so far, it is likely that actual salary increase budgets implemented in 2011 will exceed these preliminary levels.
  • 62. Page 60
    Case study D
  • 63. Page 61
    Case study D
  • 64. Page 62
    Case study E
  • 65. Page 63
    Case study E
    Canada’s top 100 CEOs
  • 66. Page 64
    Case study F
  • 67. Page 65
    Case study F
  • 68. Page 66
    Conclusion & Questions
  • 69. Page 67
    Conclusion
    Summary
    Questions